“Continued momentum” at Yorkshire Bank group as restructure gets underway
Momentum has continued at the Clydesdale and Yorkshire Banking Group more than a year after its IPO and demerger from its Australian owners, but the costs of restructuring have hit hard.
CYBG separated from the National Australia Bank in February 2016 and since then it has focused on delivery of its omni-channel services, with plans to invest £350m over a two-year period.
The bank has been on a three-year mission to become a “leading” challenger bank, and to “disrupt” the market for SME and retail customers.
Underlying profit on ordinary activities before tax increased by 15% in the six-month period to March 2017, to £123m, it said in an update today. In the prior period it reached £107m.
However statutory pre-tax profit of £46m was £12m lower than the period to March 2016, which CYBG says reflects restructuring expenses.
It announced 400 jobs to be cut in January 2017, closing 79 branches as it looks to update its service model, with a focus on online banking. CYBG plans to make cost savings of £100m by 2019, but restructuring has already cost the business £53m.
David Duffy, chief executive officer CYBG PLC, commented: “In the first half of this year we have maintained momentum in delivering our strategic priorities and commitments, and as a result are delivering significantly improved financial performance.
“Our half year results show improved underlying profit, good loan growth, stable margin, continued delivery of our cost programme and improved returns – all delivered in a highly competitive market and continuing low growth, low interest rate environment.
“As the only true full service challenger bank of scale across both retail and SME in the UK market, we have been able to deliver ahead of market growth in mortgages and growth in core SME banking, as well as making a strong start to our commitment to provide up to £6bn of lending to SMEs over the next three years.
“We have maintained excellent progress on the delivery of our plan to provide a truly full service omni-channel model for customers, driven by the expanding capabilities we have through our iB digital platform.
“Whether it be prototyping new technologies, opening the UK’s first consumer innovation lab, Studio B, or collaborating with FinTech partners with the development of our new small business e-lending solution, we are building a bank focused on a differentiated customer experience that will put customers more in control of their money.”
During the period the bank was also behind a failed bid for Royal Bank of Scotland business Williams & Glynn to bolster its retail banking expertise, but this was shelved after RBS abandoned the sale.
